The California tax preparer bond is a $5,000 surety bond that every CTEC Registered Tax Preparer (CRTP) must carry. The California Tax Education Council (CTEC) requires proof of the bond, along with education and an IRS PTIN, before you can prepare tax returns for a fee in California. The requirement comes from Business and Professions Code § 22250.1.
Who Needs a Tax Preparer Bond?
Anyone who prepares tax returns for a fee in California and isn’t exempt must register with CTEC as a CRTP — and every CRTP needs the $5,000 bond. That includes:
- New preparers registering with CTEC for the first time
- Existing CRTPs renewing each year
- Tax preparation businesses bonding each preparer who works for them
Who Is Exempt?
Generally, California CPAs, attorneys who are members of the State Bar of California, and IRS enrolled agents are exempt from CTEC registration, and so from the bond. Some employees of exempt professionals and certain financial institutions are also exempt, as long as an exempt person signs the returns (Business and Professions Code § 22258).
What the Bond Covers
The bond is payable to the people of the State of California and protects anyone damaged by a preparer’s fraud, dishonesty, misstatement, misrepresentation, deceit, or other unlawful acts or omissions. If the surety pays a claim, the preparer must repay the surety. Paid claims are reported to CTEC.
Tax Businesses With Several Preparers
The bond is $5,000 for each individual preparer. For businesses that employ several preparers, Section 22250.1 sets a $125,000 aggregate limit — ask us how it applies to your firm.
Other CTEC Requirements
- Education: a 60-hour qualifying education course to register, then 20 hours of continuing education every year.
- PTIN: a Preparer Tax Identification Number from the IRS.
- Background check: Live Scan fingerprinting for new registrants.
- Renewal: by October 31 each year to stay current.
- Client disclosure: you must give clients your bond information, including the surety company’s name and the bond number.
Keeping Your Bond Current
You can’t prepare returns for a fee without a current bond. The surety must give 30 days’ notice before canceling, so if you get a cancellation notice, replace the bond before it takes effect.
How Much Does It Cost?
You do not pay the full bond amount. You pay a premium — a percentage of the bond amount based mainly on your personal credit and business history. We submit your application to several surety companies, and each sets its own rate, so your premium depends on which surety approves you and isn’t set until you’re approved. If one surety declines, we go to the next.
How to Get Your Tax Preparer Bond
- Contact us with your name and business information.
- Complete a short application.
- Get approved and pay your premium.
- Receive your bond and enter the bond information in your CTEC registration.